Last Tuesday the Queen delivered her speech outlining her government’s focus for the next four years. As expected it did not include much substance. All those key issues during the Conservative election campaign were left out, because crucially this needs to be voted through parliament later this week. 
With a couple of those key issues being the dementia tax (and subsequent U-turn) and foxhunting you could almost think that the Conservatives were not seeking re-election.
Nevertheless, as a consequence of Theresa May not obtaining her majority, the Queen’s speech was understandably overly focused on Brexit. The one problem with this is that nobody actually knows what this looks like. However, the consensus is that it is likely to focus on more of a soft Brexit as opposed to a hard one.
Of course Brexit was always going to be in the Queens speech, but with little else to focus on domestically (apart from policies with cross-party support) the Queen’s speech was almost a pointless exercise.
Consequently the UK markets have been in limbo over the last couple of weeks, as there has been nothing really of substance for them to really get their teeth into, but I’m sure this will change as the negotiations develop.
As the Conservatives did not get their majority, I believe that this will actually have a more positive effect on the UK economy in the long-term. The government will now have to adopt a looser fiscal policy. This will result in more infrastructure spending and fewer cuts to public services and pay, which should have the effect of boosting the economy. Austerity is out, even though debt is at record levels.
Furthermore, last week marked the one year anniversary since Britain voted to leave the EU, and since then arguably the biggest winner has been the stock market, as long as you are exposed to overseas earners and less so to UK domestics.
There remains limited value outside the equity markets and with inflation growing and wage growth static, coupled with very low interest rates, it’s very difficult to identity areas to invest in to provide a real return. However, domestically focused stocks have been slightly overlooked since the devaluation of sterling. 
The highly rated Neil Woodford has also made this point recently with the complete disposal of GlaxoSmithKline – a very multinational company, in favour of a £208m investment in Lloyds.
This is significant for a number of reasons; firstly, following a long period of restructuring, Lloyds is very much a UK domestic bank with very little exposure overseas. Secondly, as well as Lloyds he has also invested the sale proceeds from GlaxoSmithKline into other cyclical UK stocks such as housebuilders, Topps Tiles, Card Factory and Eddie Stobart Logistics.
Remember how he built his reputation by avoiding the worst of the dotcom bubble and the 2008 financial crash? As always, there will be plenty of commentators and so called ‘experts’ in the weeks and months ahead commenting on the UK economy and what lies ahead. But there are also those whose comments and actions hold more weight than others - and Neil Woodford is one of those characters. The expectations of the government on Brexit are now so low that the risk to the upside is very real and that provides opportunity.
There is also another argument for focusing more domestically, and that is the health of the global economy as a whole. I don’t think there is anyone who really thinks Donald Trump will be able to follow through on all his policies, and this may lead to a cooling of the US economy as well as a correction in the US markets, or at best underperforming by going nowhere.
Finally, there is also a case for locking in some of the gains on any overseas investments because of the currency boost, whilst reducing exposure to potentially overvalued markets elsewhere. The currency effect has roughly doubled returns from the US equity market for a UK investor. When the unexpected provides good fortune, don’t forget to bank it in case it unexpectedly reverses.
So with currency playing such a big part, I feel that there is certainly an argument for switching some overseas investments back to the UK, and not only the UK, but domestically focused companies.
Earlier this week it has been announced that the Conservative government have reached an agreement with the Democratic Unionists (DUP) which will see them support Theresa May’s minority government. Rather than a coalition this will be a ‘confidence and supply’ arrangement, which means the DUP will support the government on key votes within the Commons. Apart from not calling the election in the first place this is the best outcome the Conservatives could have wished for.
A full blown coalition with the DUP would not have been palatable with many of the mainland UK electorate, especially as the DUP manifesto seems to hark back to another era for many. However, not all the details of this confidence and supply arrangement have been released so there is still the possibility of some discourse with the UK electorate when all the details are made clear.
Guy Stephens is technical investment director at Rowan Dartington. The views expressed above are his own and should not be taken as investment advice.